Richard C. Longworth, senior fellow at The Chicago Council on Global Affairs, contributes his knowledge and ideas about issues that affect the Midwest.

Wednesday, July 24, 2013

Letting Detroit Go

Let’s talk about Detroit. But first, let’s talk about Potosi.

You’ve probably never heard of Potosi. In its heyday, it was the biggest city in the western hemisphere. That heyday was 400 years ago, when Potosi – a silver mining city 13,000 feet up in the Bolivian Andes – supplied the Spanish conquistadores with a fortune in silver.

By 1800, the silver mostly played out and Potosi’s economy went away. There was some tin but little else, and Potosi faded into a backwater. It’s still there. It still produces a little silver, giving work to miners laboring in such awful conditions that the average longevity is about 40. It still supports (more or less) a population of 130,000, about half as many as when it was the silver city of the Americas.

Is this Detroit’s future? History is full of surprises but, on present evidence, the answer has to be yes.

Detroit’s bankruptcy has created a playing field for pundits, each of whom has a preferred villain (Democrats, car companies, unions, globalization, feckless government, heedless suburbs, the black politicians who ran the city, the white residents who fled it). All guilty as charged, and then some.

OK, but what now? Does Detroit have a future? Should it have a future? What is the obligation of the rest of us to the city and its future?

How should we think about Detroit?

Cities are organic things. They are born, they grow, they blossom and wither. Sometimes, if there’s no rebirth, they die or, like Potosi, fade into irrelevant backwaters, not the sort of place where you’d go to invest or look for a job or raise your kids.

Almost every town and city you can think of was born for an economic reason. It begins life as a mining town (like Potosi) or a factory town (like Detroit) or a port (like New York) or a trading post (like Chicago).

But in economics, nothing lasts forever. In time, the mine plays out or the factory closes. When that happens, the city has to find a new economic reason for existence, a new way to support itself. New York and Chicago have done this and so have most of the world’s great cities, many of them centuries old and the product of many economic reinventions.

Detroit was America’s fourth biggest city. It did one thing for a living, making cars, and now that’s gone away. It has to find a new job. If it does, it may create a decent future for the people who live there. If it’s doesn’t, it won’t.

The Midwestern landscape is littered with old factory towns, big and small, struggling to find their way in the age of globalization. Some aren’t making it. They won’t disappear, but they’ll lose their young people, their skilled workers, their businesses, and become slums where the poorest, least educated and least skilled wash up, because they’re the cheapest place to live.

By and large, that defines Detroit today. This judgment will infuriate the local boosters, like the columnist Mitch Albom, or pundits like Ron Fournier who claim that what’s happening in Detroit today will happen to the rest of the country and most of its cities tomorrow.

Sorry, but most American cities, let alone the U.S. government, are not so many Detroits waiting to happen. As Paul Krugman has written, Detroit is a special case, just as Greece is a special case in the European Union. Most European countries have budgetary problems, but nothing resembling Greece. Most American cities have serious problems, but Detroit is unique, the victim of a perfect economic/political/social storm.

This is not an argument for cities such as Chicago to ignore their budget shortfalls, inequality and inadequate institutions. But most of these cities, including Chicago, have a safety net – other industries, a solid downtown, a remaining middle class, a functioning government.

Detroit has no such safety net. So what’s to become of it?

The city still has loyal boosters like Albom. It has cultural assets, such as its symphony or the splendid Detroit Institute of Art, although some creditors are demanding that the city sell the Institute’s Monets and Van Goghs to pay its bills. Most recently, it has an infusion of philanthropy from Dan Gilbert, the founder and chairman of Quicken Loans, who is single-handedly trying to rebuild the city’s downtown.

But you don’t save a city by selling off its civilization, nor through deep-pocketed philanthropy. Detroit needs an economy – something to employ its people and pay its bills. It has lost its old economy and hasn’t found a new one. Until it does, it’s dead in the water.

We have to wish the people of Detroit luck in finding that new economy. But we also must ask what role the rest of the country – that is, us -- should play in this search.

Human sympathy supports generosity. But realism dictates restraint. Federal and state resources are limited. Both Michigan and the U.S. have vital needs – in infrastructure, education, investment. Most of the state and nation are better prepared than Detroit to make good use of this spending.

If we lose Detroit, we lose something of value. But let’s face it: most of Detroit is already lost. It has become a bad place to live and, certainly, a bad place to raise children. Driving through Detroit recently, I heard a radio interview with an African-American academic arguing that anyone who cared about their future or their children should leave, if only for the suburbs. Any subsidies to Detroit now should support this exodus.

Some people will stay, as in Potosi. The population, already down to 700,000 from its peak of 1.8 million, will fall more: it dropped by 240,000 in the first decade of this century. Most of the city will be abandoned, as it should be. Perhaps, in the end, it will become a smallish city, clustered around a rebuilt downtown, with enough jobs to give a couple of hundred thousand residents the services they need.

Is that bad? It’s better than what’s happening now, and it’s better and more realistic than any other plans the poor city’s rescuers may have.

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Detroit’s bankruptcy filing has generated a number of thoughtful comments and blogs. Some are linked above. Here are others:

6 Comments

The challenge I see is that all policy in most places is geared towards failing regions of states, and therefore the successful ones are starved of both the investment they need to further thrive (and thus pay the state's bills, generate growth, etc) and the legal environment to do so. On the other hand, a place like California seems to go to the other extreme, with state policy that's great for Silicon Valley and Hollywood, but pretty atrocious for everybody else.

Seems to me we have a lot of Detroits, cities with little economic reason for existence. In fact, people are already asking same questions about new cities in China. My 2 cents, renewing cities one of big challenges, 21st century

I understand the need for realism, but that can also slide into fatalism, and I think I'm seeing that here. Granted, as one who grew up in metro Detroit, I know I have my own biases here. That said, there's more than an undercurrent of "things just happen" in this post, and I find that unconvincing because things happen due to choices people and institutions make. We've seen a lot of judgement about the decisions local people and institutions have made in recent days, with a health dose of (sometimes justified) criticism. But there were a lot of other decisions made outside of the city's control that nonetheless had an impact on the city's future. Perhaps some of those decisions can be revisited in some way?

Now, I could be quite wrong here. But other cities have recovered from situations as severe or even moreso than Detroit has. I'd like to think that that was due, in part, to decisions made with the explicit intent of rebuilding those places. I'm not sure we should be so eager to throw dirt on Detroit's grave at this point.

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